Asia stocks advance on ‘cliff’ deal optimism

SarahTurner

V.Phani Kumar

HONG KONG (MarketWatch) — Most Asian stocks rose Thursday after U.S. President Barack Obama and House Speaker John Boehner expressed optimism about a deal to avert the “fiscal cliff,” sparking a solid rebound on Wall Street.

But mainland Chinese shares declined for a fourth straight session, however, dropping further toward their lowest level in nearly four years, with brokerages and commodity companies pacing the losses. The Shanghai Composite Index
000001, +1.63%
dropped 0.5%.

The broad gains came after Obama said he hoped to have a deal by Christmas to avoid the more than $600 billion of tax hikes and spending cuts kick in from January, which investors worry will drag the U.S. economy into a recession. Rep. Boehner also told reporters he was optimistic Republicans could forge an agreement with the White House. Read: U.S. stocks rally as politicians talk deal.

Some strategists said investors should be wary about paying too much attention to this week’s headlines about the “cliff.”

Alan James at Barclays Capital said that “with substantive discussions between Congressional leaders and the president not expected to kick off until next week, we would not read much into the volatile headlines.”

Peter Lai, director at DBS Vickers, said “people are waiting for concrete measures to build confidence.”

Lai added that while stocks in Shanghai have fallen to levels that he believes are oversold, he was “not pessimistic.”

Shares of brokerages suffered heavy losses on mainland Chinese bourses, helping erase gains recorded earlier in the day. Reuters cited a Chinese media report as saying that there has been discussion by key industry players to cut broker commission fees.

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